The US dollar and Japanese yen, considered two safe-haven currencies, are up on Monday while oil and US stock futures are down modestly.

The global risk-off sentiment that started at the beginning of last week remains.

There were two causes that initially sparked the global risk-off sentiment.

One, the global risk-on rally that preceded it was overextended and became unsupported, especially in light of global uncertainties and a fragile economic recovery.

Two, China’s trade deficit, reported on April 9, sparked concerns because it was perhaps the first strong evidence that soaring commodity prices are threatening to slow down the global economy.

Indeed, the first leg of this global risk-off sentiment was led by a sell-off of the Australian dollar, which – due to Australia’s strong trade relationship with China – is a proxy for Chinese economic growth.

After the sell-off last week, more bearish news emerged. These include:

1) A somewhat disappointing first quarter US corporate earnings season;

2) Concerns about what the end of QE2 will mean for global markets and economy;

3) Worries over the looming US federal debt ceiling; and

4) Renewed concerns about the European debt crisis, in particular the possibility of Greece restructuring its sovereign debt

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